You are home and laid up after a work accident, and expect that you will be so for a while. You’ve always been intrigued by investing and are wondering how you can learn how to invest, now that you have some downtime to look into it. Thankfully, your workers’ compensation is paying and you have not depleted your nest egg, so you feel you have a bit of money to play with.
For small or first-time investors, there is a host of options available online. This article will suggest an approach to first-time investments, introduce you to a few online investing opportunities, and help you get started investing with as little as $500.
How to Invest After Losing Your Job
The first tip is to start small. Only “play with” an amount of money you can afford to lose entirely. If you do happen to lose it, consider it the price you have paid for an education in investing.
Many beginning investors start with as little as $500, and that amount gives you access to many online investment platforms.
The second tip is, do not invest funds you need for another purpose, such as your child’s college fund, your emergency fund, or the money you need for next week’s groceries. Expect the funds you invest to be tied up at least five years, and again, there is always the chance you will lose it all.
The last tip is, do your research. While there are many legitimate investment opportunities online, there are also scams. If an investment vehicle attracts you, google it to see if there are any complaints or FTC (Federal Trade Commission) fines or penalties, and look into how long it has been operating and previous returns.
Finally, the trick to successful investing is to invest in something that piques your interest. That way you will be inspired to attend to current events impacting your investment and remain actively involved besides reviewing a balance sheet. This will make investing more engaging, fun, and you will learn more and make better investment decisions as a result.
Where to Invest $500 Online
Use a Robo Advisor
A Robo advisor is an automated online platform that assists investors with choosing investments based on risk tolerance and investment goals, without the high fees human financial advisors charge.
Betterment was one of the first Robo advisors. First-time investors can get started with a $0 minimum by simply answering a few questions about investing goals and current financial situation. Betterment will then create a stock market portfolio and set up regular contributions. The low annual fee is only 0.25%.
While there is a $500 minimum to start investing with Robo advisor Wealthfront, there are also more investment vehicle options such as a college savings account.
If you just want to “set it and forget it,” Wisebanyan creates a portfolio and is funded through automatic deposits each month. There are no advisory or management fees.
Shop around. There are many, many Robo advisors available, including those serving niche markets. Look for one that you find easy to navigate and that satisfies your interests, goals, and risk tolerance.
Learn about Trading, Online
If you want to learn about trading, Robinhood allows you to trade stocks, options, Exchange-Traded Funds (ETFs), and even cryptocurrency, without paying a commission. While this platform makes it easy to trade, frequent trading may make it too easy for you to lose money.
If you find the ability to frequently trade unnecessary, try using Stockpile. You can buy fractional shares of ETFs and stocks, open an account with $0, transfer money manually or set up recurring transfers to investments, and trades are only $0.99 each.
Invest in Real Estate
By investing in a Real Estate Investment Trust (REITs), small investors can own, operate or finance income-producing property without the cost and risk of purchasing real estate on their own. Investors also can diversify their holdings in REITs by purchasing shares of a REIT mutual fund or ETF. The minimum investment is often $500 or $1,000.
Lend Money to Individuals and Small Businesses
Peer-to-peer lending allows you to invest in individual loans, or you can invest in “notes,” which are SEC-registered securities that are graded according to the risk of non-payment. Online lending platforms allow you to diversify your loan portfolio based on risk tolerance.
Many are committed to social goals such as funding entrepreneurs from underserved communities, or lending to small businesses in economically-disadvantaged areas, so search for a lending opportunity that allows you to invest in something you believe in.
About the Author
Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works with Larry Pitt, a workers’ compensation lawyer in Philadelphia.